One of the keys to passing the Series 63 exam is to make sure that you have a complete understanding of how securities registration will be tested on the Series 63 Exam. This article which was produced from material contained in our Series 63 textbook and will help you master the material so that you pass the Series 63 exam.
help you master the material so that you pass the Series 63 exam.
All securities that are sold to a state residence must either be:
Exempt securities are exempt from the registration requirements of The Securities Act of 1933. Exempt securities are not exempt from the antifraud provisions of the USA. Exempt securities are:
Non-exempt securities become federally registered by submitting a registration statement to the Securities Exchange Commission (SEC). Non-exempt securities must also register in the states in which the securities will be sold. The three methods of registering securities in a state are:
It is important to understand how the three types of securities registration differ and under what circumstances the different registration methods are used.
When a company first sells stock to the public during an initial public offering (IPO), the company must file a registration statement with the SEC. The company must also file a registration statement with the state securities administrator in the states where the issue will be sold. Most IPOs will register with the state securities administrator at the same time that they are becoming registered with the SEC. This process of simultaneous registration is known as coordination.
The following must be submitted to the administrator:
If an amendment has been made to the federal registration, it must also be made to the state registration. A security’s state registration will become effective after 10 days as long as no stop order has been issued; or at the same time as the security’s federal registration becomes effective. It is important to note that a state registration may not become effective prior to the security’s federal registration becoming effective. Under the proposed amendments to the Uniform Securities Act is the extension of the state’s requirement that a security’s registration be on file with the administrator for at least 20 days. A question may ask you to remember either the 10-day or 20-day requirement. It is unlikely that a question will have both answers in the answer key.
A corporation will periodically offer new securities as a way of obtaining new funds. The corporation issuing additional securities may register the new securities in the states in which they are to be offered through filing if they meet certain guidelines. The issuer must have:
When registering a security with the state securities administrator through filing, the following must be submitted:
Registration through filing becomes effective at the same time the securities federal registration becomes effective as long as the state registration has been on file for at least five days with the state securities administrator.
Securities of issuers who do not meet the requirements for registering through filing and that are not an IPO must register through qualification. Securities of issuers that will be sold only in one state through an intrastate offering will also be registered through qualification. Registration through qualification is the most complex method of registration. The issuer must file a statement containing all of the information required by the state securities administrator. It may include:
A securities registration under qualification becomes effective when the administrator so orders.
The following apply to all types of securities registration:
The National Securities Market Improvement Act of 1996 provided federally covered exemptions for securities that have met the stringent listing requirements of any centralized U.S. stock exchange or NASDAQ Global Market System (GMS). An issuer whose common stock is listed on a U.S. stock exchange or on the NASDAQ GMS is provided an exemption for all of its securities, regardless of their type. An exemption from state registration is also provided to:
Certain securities are exempt from state registration and sales literature requirements because the issuer is exempt. Examples of exempt issuers are:
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